Investing.com - The dollar was lower against the other major currencies on Thursday as expectations that the economic impact of the U.S. debt crisis would prolong the Federal Reserve’s stimulus program weighed.
During European afternoon trade, the dollar was sharply lower against the yen, with USD/JPY dropping 0.85% to 97.92.
The dollar initially hit three-week highs against the yen after the U.S. Congress passed a bill to reopen the government and raise the debt ceiling, just hours ahead of a deadline to avert a debt sovereign debt default.
The deal will fund the government until January 15 and raise the government borrowing limit until February 7. Both sides also agreed to talks over broad budget issues in an attempt to reach a longer-term deal by December 13.
But the dollar came under heavy selling pressure amid fears that the impact of the government shutdown on the already fragile economic recovery would prompt the Fed to the delay plans for scaling back its stimulus program until at least the start of next year.
The possibility of another debt crisis also loomed, as the temporary solution does not resolve the underlying budgetary issues dividing Republicans and Democrats.
Chinese rating agency Dagong cut its sovereign rating on the U.S. to A- from A on Thursday, fuelling fears that other agencies could follow suit. Fitch placed its triple-A rating on the U.S. on “rating watch negative” earlier this week.
The euro rose to eight-month highs against the dollar, with EUR/USD advancing 0.83% to 1.3646.
Elsewhere, the pound rallied against the dollar, with GBP/USD jumping 1.01% to 1.6108.
Sterling extended gains after data released on Thursday showed that retail sales in the U.K. rose at a faster than expected rate in September.
The Office for National Statistics said U.K. retail sales rose 0.6% in September from a month earlier, compared to expectations for a 0.4% increase and were 2.2% higher on a year-over-year basis.
The dollar posted steep losses against the Swiss franc, with USD/CHF tumbling 1.02% to 0.9041.
The greenback was weaker against its Australian, New Zealand and Canadian counterparts, with AUD/USD up 0.68% to 0.9616, NZD/USD advancing 0.65% to 0.8479 and USD/CAD losing 0.21% to trade at 1.0305.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, dropped 0.84% to 79.90.
The U.S. Department of Labor said Thursday the number of individuals filing for initial jobless benefits last week declined by 15,000 to a seasonally adjusted 358,000 from a downwardly revised 373,000 in the preceding week.
Analysts had expected U.S. jobless claims to decline to 335,000 last week.
The U.S. was to publish a report on the Philly Fed manufacturing index later Thursday.
During European afternoon trade, the dollar was sharply lower against the yen, with USD/JPY dropping 0.85% to 97.92.
The dollar initially hit three-week highs against the yen after the U.S. Congress passed a bill to reopen the government and raise the debt ceiling, just hours ahead of a deadline to avert a debt sovereign debt default.
The deal will fund the government until January 15 and raise the government borrowing limit until February 7. Both sides also agreed to talks over broad budget issues in an attempt to reach a longer-term deal by December 13.
But the dollar came under heavy selling pressure amid fears that the impact of the government shutdown on the already fragile economic recovery would prompt the Fed to the delay plans for scaling back its stimulus program until at least the start of next year.
The possibility of another debt crisis also loomed, as the temporary solution does not resolve the underlying budgetary issues dividing Republicans and Democrats.
Chinese rating agency Dagong cut its sovereign rating on the U.S. to A- from A on Thursday, fuelling fears that other agencies could follow suit. Fitch placed its triple-A rating on the U.S. on “rating watch negative” earlier this week.
The euro rose to eight-month highs against the dollar, with EUR/USD advancing 0.83% to 1.3646.
Elsewhere, the pound rallied against the dollar, with GBP/USD jumping 1.01% to 1.6108.
Sterling extended gains after data released on Thursday showed that retail sales in the U.K. rose at a faster than expected rate in September.
The Office for National Statistics said U.K. retail sales rose 0.6% in September from a month earlier, compared to expectations for a 0.4% increase and were 2.2% higher on a year-over-year basis.
The dollar posted steep losses against the Swiss franc, with USD/CHF tumbling 1.02% to 0.9041.
The greenback was weaker against its Australian, New Zealand and Canadian counterparts, with AUD/USD up 0.68% to 0.9616, NZD/USD advancing 0.65% to 0.8479 and USD/CAD losing 0.21% to trade at 1.0305.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, dropped 0.84% to 79.90.
The U.S. Department of Labor said Thursday the number of individuals filing for initial jobless benefits last week declined by 15,000 to a seasonally adjusted 358,000 from a downwardly revised 373,000 in the preceding week.
Analysts had expected U.S. jobless claims to decline to 335,000 last week.
The U.S. was to publish a report on the Philly Fed manufacturing index later Thursday.